Much has happened since the election of Donald J. Trump as the 45th President of the United States and the return of both houses of Congress to Republican control. The Trump transition team has repeatedly declared its intention to “dismantle” the Dodd-Frank Act (“Dodd-Frank” or “Act”), in the interim calling for an immediate moratorium on new rulemaking not required for emergencies to allow for a systematic review before further action is taken. Congress has been similarly vocal in its call for repeal of Dodd-Frank. During this transition period, Republican leaders of the House introduced the Midnight Rules Relief Act of 2016, seeking to enhance Congressional authority to block final agency rules under the Congressional Review Act. The Chairman of the House Committee on Agriculture urged the Chairman of the U.S. Commodity Futures Trading Commission (“CFTC”) to “refrain from pushing through controversial regulations at the end of your tenure. . . .”
Adherence to the professed will of the President-elect and Congress by the CFTC has been mixed: on the one hand, the CFTC has pressed forward with finalizing its new position aggregation rule and re-proposed rules addressing the imposition of capital requirements for non-prudentially regulated swap dealers and the regulation of automated trading in the commodities markets. On the other hand, the CFTC ostensibly backed down from issuing final rules requiring the imposition of federal position limits for a list of “core” futures contracts and economically equivalent swaps; instead electing to re-propose the position limits rules for further public comment.
Against this backdrop, Cadwalader attorneys begin a discussion about the potential levers available to the Trump Administration and the Republican Congress, short of a repeal of the Act, to reduce the regulatory burden on the commodities markets.
Congressional Review ActThe Congressional Review Act (“CRA”) provides a mechanism for Congress to review and effectively overturn newly promulgated agency rules before they become effective. The CRA applies to “major” rules and provides Congress with a time-limited window to reject agency action. Although Congress has utilized the CRA to overturn an agency rulemaking only one time, the one instance was in 2001 for regulations promulgated in advance of the transition from then-President Clinton (Democrat) to newly elected President George W. Bush (Republican). The transition from President Obama (Democrat) to President-elect Trump (Republican) may provide a similar environment for Congress to utilize the CRA if agencies under the Obama Administration promulgate major rules in advance of the transition to the Trump Administration. Indeed, Congress has featured the CRA in many of its public demands for a rulemaking standstill. Below is a short summary of the process implemented by the CRA.
- Before an agency rule can take effect, the agency must submit the rule to each House of Congress and the Comptroller General. In addition to the rule, the agency submits a form identifying whether the rule is a “major” rule.
- A “major” rule includes any rule that is likely to result in one of the following: (1) an annual effect on the economy of one hundred million dollars or more ($100,000,000); (2) a major increase in the cost of prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions; or (3) significant adverse effects on competition, employment, investment, productivity, innovation, or on the...
